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Demand Analysis
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Relatively Elastic vs.
Inelastic Demand Curves Q 1 Q 2 Q 2 ’ P 1 P 2 D’ D D’ is relatively more elastic than D P Q
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21.
Arc Elasticity Briefly,
arc elasticity is simply an average elasticity along a range of the demand curve.
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35.
Change in Quantity
Supplied 20 10 B A 5 10 A to B : Increase in quantity supplied Price Quantity S 0
36.
Change in Supply
S 1 8 7 S 0 to S 1 : Increase in supply 6 Price Quantity S 0 5
37.
38.
39.
Equilibrium Price and
quantity Price Quantity S D 8 7
40.
If price is
too low... Price Quantity S D 5 6 12 Shortage 12 - 6 = 6 6 7
41.
If price is
too high… Price Quantity S D 9 14 Surplus 14 - 6 = 8 6 8 8 7
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